HENRY SY-LED SM Prime Holdings, Inc. is spending P5.5 billion to launch mixed-use developments outside Metro Manila anchored on low-cost residential projects.
 
Jose Mari H. Banzon, SM Prime business unit head for primary residential, said in a mobile phone message the total capital expenditures for the projects in Bulacan, Cavite and Pampanga may reach P5.5 billion, P1.4 billion of which will be disbursed this year.

“The projects comprise medium-rise buildings, and house and lot packages mostly located next to SM malls,” Mr. Banzon said.

SM Prime is set to venture to the broader low-cost segment of the residential market this year, offering residential products priced between P800,000 to P1.5 million.

The price ceiling for these projects falls under the Housing and Urban Development Coordinating Council’s definition of low-cost housing (level 1), which is between P450,000 to P1.7 million.

The foray in economic housing will account for a tenth of the 12,000 to 15,000 units the real estate firm intends to launch this year with an estimated sales value of P36 billion to P40 billion, Mr. Banzon had said.

SM Prime was supposed to roll out projects in Cavite and Pampanga last year, but it pushed back the launch to a later date as they consolidated properties for these developments.

The shopping malls will fuel the company’s growth as the property giant embarks on the third year of its five-year program that entails a capital spending of P400 billion to double its business by 2018, SM Prime President Hans T. Sy said on March 1.

“We have planted the seeds [so on our] five-year program by end-2018, we are very much on track,” Mr. Sy had said.

To date, SM Prime has a total of 56 malls in the Philippines with total retail space of 7.3 million square meters (sqm) and six shopping malls with a gross floor area of 900,000 sqm including the recently opened SM City Zibo.

SM Prime presently has 27 residential projects in the market, 25 of which are in Metro Manila and two in Tagaytay. This year, SM Development Corp. will launch projects in Quezon City, Bicutan and Sucat in Parañaque, Las Piñas and Pasay at the Mall of Asia Complex.

For hotels and convention centers, the 347-room Conrad Hotel Manila is expected to open in the second half 2016.

SM Prime reported a 54% year-on-year uptick in consolidated net profit to P28.3 billion last year, buoyed by a P7.4-billion one-time trading gain on marketable securities booked in the first quarter of 2015.

Without the non-recurring item, net income climbed 14% year on year to P20.9 billion last year, slightly faster than the 13% jump to P18.39 billion in 2014.

SM Prime is part of SM Investments Corp., which has core businesses in retail, banking and real estate. The Sy family, headed by the country’s richest man Henry Sy, Sr., also has interests in gaming, geothermal energy and infrastructure.

Shares in SM Prime rose 70 centavos or 3.26% to close at P22.15 each on Monday.